Up 285% since June, PLS shares lifting off today on multi-year lithium offtake agreement

PLS Group Ltd (ASX: PLS) shares are leaping higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock formerly known as Pilbara Minerals closed yesterday trading for $4.17. In morning trade on Tuesday, shares are changing hands for $4.39 apiece, up 5.2%.

For some context, the ASX 200 is up 0.6% at this same time.

Here’s what’s catching investor interest today.

PLS shares lift on Canmax lithium deal

Before market open this morning, PLS announced that it has inked a multi-year offtake agreement with Chinese-listed lithium-ion battery material manufacturer Canmax Technologies Co Ltd (SHE: 300390).

The binding two-year agreement will see PLS supply Canmax with 150 thousand tonnes a year of spodumene concentrate.

PLS shares look to be catching some added tailwinds with the company reporting it has the option to supply additional volumes, as well as an option to extend the agreement for a third year.

The miner noted that its ability to increase volume based on its own discretions gives it the flexibility to respond to evolving market conditions and customer requirements across its portfolio.

The ASX 200 lithium stock will receive a floor price of US$1,000 per tonne (SC6 basis) from Canmax. PLS noted there is no upside price limitation. This provides the miner with downside protection while maintaining full upside leverage should prevailing lithium market prices rise.

As part of the deal, PLS will also receive a US$100 million unsecured interest-free prepayment. That money will be repaid via the spodumene concentrate to be sold to Canmax under the offtake agreement.

The ASX 200 lithium miner said it has the flexibility to supply the new offtake commitments from its Pilgangoora Operation, located in Western Australia.

What did management say?

Commenting on the agreement with Canmax that’s boosting PLS shares today, CEO Dale Henderson said, “This agreement builds on our established relationship with Canmax and reflects both the quality and consistency of Pilgangoora’s spodumene and PLS’ proven capability as a reliable, large-scale operator.”

Hernderson added:

The US$100 million interest-free prepayment and floor price structure demonstrate strong commercial confidence in our product and performance, while preserving full exposure to price upside.

The agreement strengthens our near-term liquidity and preserves operational flexibility through optional volumes, supporting disciplined production and sales decisions as lithium market fundamentals continue to improve.

Deepening our partnership with Canmax further diversifies our customer base and reinforces PLS’ position as a leading, reliable supplier at scale to the lithium materials market.

With today’s intraday gains factored in, PLS shares are up 99.6% in a year and up 285.1% since posting one-year closing lows on 3 June.

The post Up 285% since June, PLS shares lifting off today on multi-year lithium offtake agreement appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.